Supreme Court decides not to directly hear Microsoft case

WASHINGTON -- The U.S. Supreme Court today decided not to hear the Microsoft Corp. antitrust case until the breakup order against the company is first reviewed by the U.S. Court of Appeals, rejecting the government's argument that the case deserved an expedited review by the nation's highest court because of its "immense" economic importance.

The appeals court for the District of Columbia quickly latched onto the case, issuing an order that requires Microsoft to file by next Monday a proposed schedule for proceeding with its promised appeal.

The order from the Washington-based appeals court gives the government until Oct. 5 to respond to Microsoft's proposed schedule, and Microsoft would then have to reply by Oct. 10. The two sides "may, if practicable, submit a joint proposal," the court noted.

Legal experts said the Supreme Court's decision not to immediately take up Microsoft's appeal of U.S. District Court Judge Thomas Penfield Jackson's June order that it be split into two separate companies is good news for the software vendor. An initial review by the appeals court gives Microsoft more time to present its case and improves its odds for reversing or weakening Jackson's ruling that the company used a monopoly in operating systems to thwart competition and stifle innovation, according to legal analysts.

The U.S. Court of Appeals may be a friendlier venue for Microsoft than Jackson's courtroom, based on earlier decisions that the panel made in antitrust-related proceedings against the company. Two years ago, for example, the appeals court reversed an injunction issued by Jackson that prohibited Microsoft from bundling its Internet Explorer Web browser with Windows 95.

Involving the appeals court in the case "could only lead to [Microsoft's] advantage," said Yee Wah Chin, an antitrust attorney at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in Washington. "Conversely, for the government, they have more shots at losing."

The immediate impact of the Supreme Court's decision is to prolong a case that has been in litigation since May 1998, when 19 states and the U.S. Department of Justice filed a lawsuit against Microsoft accusing it of anticompetitive behavior. The appeals court isn't expected to complete its work on the case until this time next year. Barring any settlement, the case would then probably go back to the Supreme Court for consideration, with a final decision on the matter coming by mid-2002.

Microsoft spokesman Jim Cullinan today said the company remains "confident of our case on appeal," regardless of whether it was heard by the court of appeals or directly by the Supreme Court. "We look forward to presenting our arguments," he added.

DOJ spokeswoman Gina Talamona declined to comment on the Supreme Court's decision beyond saying that federal prosecutors look forward to presenting their case to the court of appeals as expeditiously as possible. No public schedule has been set yet for starting the appeals process, according to Mark Langer, clerk of the court for the U.S. Court of Appeals.

In written arguments to the Supreme Court, the government had argued that an expedited review was necessary because of the uncertainty that Jackson's breakup order had created, particularly for high-tech companies that are dependent on Microsoft's operating system specifications for systems development. But Microsoft argued that the case was "too messy" for the Supreme Court and needed an initial review by the lower appellate court to clarify the issues involved in the matter.

Supreme Court Justice Stephen G. Breyer dissented from today's decision, saying the high court should have directly taken up the antitrust case. Breyer said he recognized that an appeals court could narrow the focus of the case and make initial rulings on the legal issues it presents, but he added that the Supreme Court could have handled those aspects by requesting additional legal briefs from each side.

"This case significantly affects an important sector of our economy -- a sector characterized by rapid technological change," Breyer wrote. "Speed in reaching a final decision may help create legal certainty. That certainty, in turn, may further the economic development of the sector so important to our nation's prosperity."

While today's announcement was a victory for Microsoft, Hillard Sterling, an antitrust attorney at Gordon & Glickson LLC in Chicago, said the Supreme Court's decision not to immediately hear the company's appeal shouldn't be interpreted as a statement about the strength or weakness of the government's case.

"I don't think you can extrapolate a decision on the merits from these procedural issues," Sterling said. "Doing so would be like reading tea leaves."

But Sterling added that the decision does buy more time for Microsoft, something that helped IBM in its decade-long antitrust battle with the government in the 1970s. "The greater the delay, the stronger Microsoft's arguments become that these markets are self-correcting," he said. "Each day brings new technological and economic developments that arguably render this case less relevant to protecting competition."

James Evans of the IDG News Service contributed to this report.

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